Wall Street's plunge yesterday shed $600 Billion from investors. Merrill Lynch is no more after 94 years bought by Bank of America (BofA bought LaSalle who bought Standard Federal who bought Michigan National who bought.....). Lehman Brothers bankruptcy is the biggest ever and we already know what happened to Bear Stearn, Freddie and Frannie.
Here is the irony. Oil is near $90 a barrel, a full $50 lower than just a couple of months ago. Gas futures have dropped below $2.60 and commodities in general have plunged. In fact, August might be the first month in two years that has negative price inflation.
So why did the market tank? Why is gas still over $4.00 a gallon? What financial institution is next?
The answer: Fear. Uncertainty.
As people, we despise fear and uncertainty. We want to feel safe and secure. Today, are you sure that the money you put into the bank is safe and secure? Well, all deposits up to $100,000 are safe and secure but over that amount, fear and uncertainty.
Since financial markets aren't part of the beauty business as we know it, it's easy to dismiss the news. Most of us don't even know who Lehman, Bear, Freddie and Frannie are. But here's the reason you need to be aware: History repeats itself. Remember the dot-com crash? That was only 8 years ago and it did effect most people. We could be headed to something worse. I don't know.
But at the end of the day, how much is $600 Billion? Below is the approximate sales for select companies:
Wal-Mart: $400 Billion
Proctor & Gamble: $70 Billion
Target: $60 Billion
Kroger: $30 Billion
L'Oreal: $25 Billion
The entire annual sales for all of the above companies plus $15 Billion left over for dessert is what you could have bought with yesterday's loss.
Do you think the economy is going to get better or worse in the next 12 months? And do you think the stock market affects the beauty industry?